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Huawei Debuts $2,800 Phone After Barely Growing Sales in 2020

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Bloomberg News
·3 min read
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(Bloomberg) -- Huawei Technologies Co. took the wraps off a high-end foldable smartphone to try and stake out a place in the fast-expanding category, revealing that revenue and profit barely grew in 2020 at the height of Trump-era sanctions.

China’s largest technology company is trying to keep its shrinking mobile gadgets business alive despite dwindling expectations that Washington will roll back its curbs anytime soon. On Monday, it introduced the 17,999-yuan ($2,800) Mate X2 that unfolds into an 8-inch (203mm) screen powered by Huawei’s own 5G Kirin 9000 chip.

Once the world’s biggest smartphone maker, Huawei was forced to dig into a dwindling store of chips after Washington cut it off from American technology and key suppliers like Taiwan Semiconductor Manufacturing Co. Yet billionaire founder Ren Zhengfei has vowed to keep its smartphone business, dismissing reports of a potential sale. The company is now focusing on serving enterprise clients to offset the lost business.

“We managed marginal growth both in sales and profit,” Ken Hu, the company’s current rotating chairman, told the Mobile World Congress in Shanghai Tuesday. “We’ll work with partners on how to apply Huawei products in their businesses. Through these partnerships, we are not only hoping Huawei can develop a number of solutions from zero, but also duplicating these solutions in scale.”

Read more: Huawei’s Quarterly Revenue Growth Slows, Hit by U.S. Sanctions

Huawei has been running phone production at close to minimum capacity to preserve its existing cache of components and prolong the life-cycle of its devices, spurring product shortages at retailers across the country, according to people familiar with the matter.

The Mate X2 will go on sale in China on Feb. 25, priced at 18,999 yuan for a beefier version with 512 gigabytes of storage. It’ll run a version of Google’s Android tailored for China, which lacks the U.S. company’s core apps and commercial features, but can be updated to Huawei’s own Harmony operating system in April.

“We have prepared enough capacity for Mate X2, the capacity is growing on daily basis,” Richard Yu, chief executive of Huawei’s consumer electronics unit, said at a launch event in Shanghai on Monday.

Yu said Monday that more of the company’s top-tier phones will be powered by its in-house software rather than Android in future.

Read more: Huawei’s Founder Vows To Keep Making Smartphones in Biden Era

Huawei found itself thrust into the heart of U.S.-Chinese tensions in 2019 after the White House labeled it a national security threat and later imposed a series of trading restrictions. Those curbs curtailed its growth and forced the company to sell off its low-end Honor devices arm last year.

Ren has urged the new U.S. administration to adopt an “open policy” toward Huawei, which in turn would benefit its American suppliers. But Biden’s nominee for Commerce secretary, Gina Raimondo, said during her Senate confirmation process she knew of “no reason” why Trump-era curbs shouldn’t continue.

Huawei’s smartphone shipments dived 42% in the last three months of 2020 while its biggest competitors Samsung Electronics Co., Apple Inc. and Xiaomi Corp. all gained market share, according to researcher IDC.

Read more: Samsung’s $1,999 Fold 2 Rectifies Major Foldable Phone Foibles

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